WASHINGTON, April 29 (Reuters) - U.S. single-family homebuilding increased to a 13-month high in March, but the improvement was likely a blip as permits for future construction fell sharply and confidence among builders remained subdued.

Single-family housing starts, which account for the bulk of homebuilding, surged 9.7% to a seasonally adjusted annual rate of 1.032 million units, the highest level since February 2025, the Commerce Department's Census Bureau said on Wednesday.

Single-family housing starts increased to a pace of 941,000 units in February from 898,000 units in January. They rose 8.9% year-on-year in March. 

Permits for future construction of single-family homes decreased 3.8% last month to a rate of 895,000 units. They had increased to a pace of 930,000 units in February from 876,000 units in January. Single-family building permits dropped 7.9% year-on-year in March.

The Census Bureau has caught up on releasing housing starts and building permits data after delays caused by last year's government shutdown. Homebuilding was already under pressure from tariffs on imported goods,  including lumber and vanity cabinets, before the U.S.-Israeli war with Iran abruptly halted a downward trend in mortgage rates. 

A National Association of Home Builders survey this month showed homebuilder confidence deteriorated in April, with builders reporting that suppliers had increased building material costs due to higher fuel prices, including gasoline and diesel. NAHB estimated that energy costs made up roughly 4% of residential construction material input and service costs.

The popular 30-year fixed-mortgage rate has jumped from an average of 5.98% in late February. It averaged 6.23% last week after shooting up to 6.46% at the start of April, data from Freddie Mac showed. 

Starts for housing projects with 5 units or more, a very volatile segment, increased 9.6% to a rate of 446,000 units in March. Multi-family housing starts soared 13.5% year-on-year. 

Overall housing starts vaulted 10.8% to a pace of 1.502 million units. They increased 10.8% year-on-year in March.

Building permits for multifamily housing projects tumbled 23.5% to a rate of 427,000 units in March. Overall building permits declined 10.8% to a rate of 1.372 million units last month. They dropped 7.4% year-on-year in March.

Economists believe residential investment, which includes homebuilding, contracted for a fifth straight quarter in the January-March period. The government will publish its snapshot of first-quarter gross domestic product on Thursday.

A Reuters survey of economists is forecasting that GDP increased at a 2.3% annualized rate last quarter. Economic growth nearly stalled in the fourth quarter, with GDP rising at only a 0.5% pace. The Commerce Department's Bureau of Economic Analysis will publish its advance estimate of first-quarter GDP on Thursday.